Consumer Issues
Air travellers stranded as pilot strike hit flights

Aviation minister Ajit Singh says that the aviation industry and Air India are passing through a tough phase due to high price of ATF, high service tax along with airport charges. Why are Indigo, GoAir and SpiceJet less affected?

As the agitation by protesting pilots entered the fourth day on Friday, Air India's 12 international flights were cancelled even while civil aviation minister Ajit Singh hoped that the airline "does not enter into an ICU". Pilots from cash-strapped Kingfisher Airlines also started reporting 'sick' due to which about 12 flights of the carrier were cancelled. Kingfisher pilots are 'sick' of the way the management is handling the issue of their salaries since past few months.

The minister also sympathised with the 'ailing' airlines saying that the aviation industry is going through a tough phase due to high price of ATF and high service tax. However, while all airlines are defaulting on payments, Indigo, the only profitable airline in the country, and privately-held GoAir have not defaulted on airport payments.

"All our long-haul flights to US, Europe, Riyadh and Jeddah have been cancelled," an Air India official said. This has been done due to non-availability of pilots who are on mass sick leave since Tuesday, he added.

According to a PTI report, Air India's long overhaul flights to New York, New Jersey, Chicago, Toronto, Frankfurt, London and Paris from Delhi and Mumbai were cancelled. The national carrier has stopped taking bookings till 15th May on its flights to US, Europe and Riyadh.

With pilots remaining defiant, the Air India management had yesterday sacked nine more pilots.

Civil aviation minister Ajit Singh expressed hope that pilots will "get well soon as they are sick. Air India is sick and I hope it doesn't reach ICU".

Noting that the aviation industry and Air India are passing through a tough phase due to high price of ATF, high service tax along with airport charges and others, Mr Singh said he will take up the issue with prime minister Manmohan Singh.

On the problems facing Kingfisher, he said, "Kingfisher is a private company and they will have to sort out their problem themselves."

"Kingfisher has been in trouble since some time. They have been facing some financial problems. Air India is even worse but it (Kingfisher) is a private company so they have to mobilise the resources by themselves," Mr Singh said.

"The main problem is how to make Air India stand on its feet, how to make it profitable and in that all the employees and their union will have to co-operate otherwise it will not stay afloat. They (airlines) have to realise that we do not raise fares for our personal interest. Air India will sink and with that all of us will sink," he said.

The civil aviation minister stressed that discipline has to be maintained if Air India has to survive.

"All unions have to.... rise above their personal interests. We are willing to discuss with any union but they should call off the strike, especially when it is vacation time. If Air India does not stay afloat, all their jobs will be at stake," he said.

Just two days ago, Mr Singh has said that all airlines from India, except two, have defaulted on paying airport charges. Indigo, the only profitable airline in the country and privately-held GoAir have not defaulted on airport payments, he said.

The government has initiated legal action against Kingfisher Airlines "towards dishonour of the cheques submitted" by the carrier, while Jet Airways and SpiceJet have been served notices on overdues, Mr Singh said.

According to a PTI report, Kingfisher pilots have been protesting since yesterday against non-payment of their due salary. Sources said a section of Kingfisher pilots have got their due salary, especially co-pilots but the captains have not been paid.

Meanwhile, following a warning from Kingfisher chief Vijay Mally for "acting firmly and decisively", and a meeting with management, a section of pilots from the carrier decided to call off their agitation. The management has once again assured the employees of remitting the January salaries by 15th May, and a part-payment of the February dues would follow soon. Earlier they were assured by the management that their salary for the month of January will be paid by 9th May but it did not happen due to which they started reporting sick.

Kingfisher Airlines has been facing financial troubles for almost a year now. The airline, which never made a profit since its inception in May 2005, reported a net loss of Rs444.26 crore in the December quarter.

Due to paucity of funds, Kingfisher now operates only 110 flights a day with a fleet of 20 aircraft as against 400 flights per day last year with 66 planes.

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COMMENTS

a v moorthi besides TIHAR

5 years ago

This time AI Pilots and their Union by going for agitation ( not STRIKE as their leader Jitendra Ahwad claims repeatedly on TV)might have been trapped like the rat which fell for the eatable kept in the mouse trap and other AI staff beware, you would have already done more strikes than any other Airline staff in the entire world. If Ajit Singh is a chip of the old block Ch Charan Singh then AI Pilots will be hanged individually even if they try to hang together. Ajit Singh has nothing to lose. if he is dropped from cabinet on taking on AI Pilots it will one more nail in coffin of Congress in U.P. If strike fails it will be atleast a small gain for the Govt, as it will able to shout Govt is alive. As a tough action Govt should requisition services of IAF Pilots just like earlier once in 1970's then Air Chief P.C.Lal offered the services of IAF pilots when the Airlines Pilot went on unnecessary strike because toilets in the aircraft were not cleaned and stink was spreading inside, when Pilots very well knew that job needs to be done by one of their own brother from a different department . AI staff behave because you are dealing with a JAT boy .

2G: Supreme Court to hear government's Presidential Reference from 10 July

The government moved the Presidential Reference, in which eight questions have been raised, including whether there could be judicial interference in policy matters, vis-a-vis disposal of natural resources and investments made by foreign investors under multi and bilateral agreements

New Delhi: The Supreme Court on Friday decided to commence hearing on Presidential Reference moved by government on the 2G spectrum from 10th July. The union government is seeking opinion from the apex court on issues arising out of the SC's 2G spectrum judgement including whether auctioning of natural resources across all sectors is mandatory, reports PTI.

A five-judge Constitution Bench headed by Chief Justice SH Kapadia issued notices to the state governments and industrial chambers FICCI and CII and sought their responses on behalf of the private industries.

The court also issued notices to the NGO, Centre for Public Interest Litigation (CPIL) and Janata Party President Subramanian Swamy on whose petitions a bench comprising justices GS Singhvi and AK Ganguly (since retired) had delivered a judgement on 2nd February for cancelling 122 telecom licences by holding that the first-come-first-served policy was illegal and unconstitutional.

The Reference has also asked the court for its view whether the verdict in the 2G case be given retrospective effect for radio waves granted since 1994.

The bench headed by Justice Singhvi had held that all natural resources should be allocated through auction.

The Constitution Bench also comprising justices DK Jain, JS Khehar, Dipak Misra and Ranjan Gogoi said that the notices shall be served within a period of two weeks to the parties including by email, fax, courier or by the messenger of the Union of India.

The bench also said the notices on the reference will be served on all states through their standing counsel. It made it clear that for expeditious hearing of the matter, statements of fact and arguments shall be filed by the parties in the court within three weeks.

The government on 12th April moved the Reference signed by President Pratibha Patil in which eight questions have been raised, including whether there could be judicial interference in policy matters, vis-a-vis disposal of natural resources and investments made by foreign investors under multi and bilateral agreements.

"Whether the judgement lays down that the permissible method for disposal of all natural resources across all sectors and in all circumstances is by the conduct of auction," the Reference has stated.

"Whether the court holds that within the permissible scope of judicial review that the policy is flawed, is the court not obliged to take into account investment made under the said policy including the investment made by foreign investors under the multi and bilateral agreements," it said.

It sought the court's opinion on "whether the judgement is required to be given retrospective effect so as to unsettle the licences issued for 2G spectrum and allocated after 1994 till 2008."

The Reference also touched upon the 3G spectrum allocated through "auction" and wanted to know the implications of the judgement on it.

"Whether 3G spectrum acquired through the auction in 2010 by entities whose (2G) licences have been quashed in the judgement stands withdrawn," it asked.

A meeting of the Union Cabinet, chaired by Prime Minister Manmohan Singh, on 10th April cleared the Telecom Ministry's proposal to seek the Supreme Court's opinion on various issues arising out of the 2 February 2012 judgement.

The two-judge bench, in its verdict, had also observed that auction was best suited route for allocating natural resources like telecom spectrum because the policy of first-come-first-serve was flawed.

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DSP BlackRock Dynamic Asset Allocation Fund: Aiming to time the market

Dynamic plans give fund managers the flexibility to time the market but it has not worked that well so far

DSP BlackRock Mutual Fund plans to launch a new fund-DSP BlackRock Dynamic Asset Allocation Fund. According to the offer document filed with the Securities and Exchange Board of India (SEBI), it would be an open-ended fund of funds scheme where the investment manager will have the discretion to take aggressive asset calls. The fund manager could choose to invest anywhere from 0% to 100% in equity assets; in this case the money would be invested in units of DSP BlackRock (DSPBR) Equity Fund while the rest would be invested in units of DSPBR Strategic Bond Fund and money market securities or liquid schemes of DSPBR.

Dynamic schemes are attempts at market-timing-something that fund companies usually claim should not be done. Not surprisingly, the idea has been hard to implement. The performance of dynamic schemes is difficult to be judged as there is no such index to benchmark their performance. But given their flexibility they are expected to perform better than other schemes or at least give positive returns. DSPBR has chosen the Crisil Balanced Fund index to benchmark the performance of this scheme.

DSPBR Equity Fund is one of the newer schemes of the fund house having been launched less than five years ago. In the last three years the scheme has returned 19.72% compared to the benchmark return of 12.31%. Another scheme which has done well in the past from DSPBR's stable is DSPBR Top 100 Equity Fund. In fact the fund management of DSPBR has done reasonably well with three out of four equity diversified schemes consistently beating the benchmark over the last twelve five-year monthly rolling periods.

But this performance has come without the flexibility of dynamic asset allocation. Will the flexibility be a boon or a bane? Fund managers are skilled in studying a company and buying the stocks for the long-term. Only a rare few, anywhere in the world, are astute market-timers and they apply very sophisticated and proprietary quantitative techniques because no formula works in all market conditions. This would be a tough task, but seeing that this scheme is benchmarked against a balanced fund index, the fund managers would follow a similar allocation, investing around 65% in the equity scheme and the rest in the debt scheme.

Similar funds like ICICI Prudential Dynamic Fund and HSBC Dynamic Fund have had an allocation of 80% to 90% in equity over the last one year. Pramerica Dynamic Fund had a 70% to 75% allocation towards equity in the same period. How have these funds performed? In the last one year when the S&P Nifty returned -10.35%, ICICI Prudential Dynamic Plan performed the best returning -6%. Pramerica Dynamic Fund and HSBC Dynamic Fund returned -8.07% and -9.60% respectively. The Crisil Balanced Fund index returned -3.44% in this period and the Crisil MIP Blended Fund index (15% equity, 85% debt) returned 5.72%. Therefore fund managers of dynamic schemes have not been that adept at using their flexibility in a volatile market.

A better option for the investors would be to rely on a systematic investment plan. Which scheme to choose? A good equity diversified scheme would do the trick. DSPBR Equity Fund has done well and is a deserving candidate for your money.

User

COMMENTS

A S Paranjape

3 years ago

Some facts needs correction.
1. DSPBR equity fund is launched on 29.4.1997 i.e. more than 15 years old and not 5 years.
2.Dynamic asset allocation need not restrict to 65% equity. It has mandate to vary both equity and debt from 10% to 19%
3.No comment is made on the theme i.e. about Yield gap ratio on which the re-balancing will be done.

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